52
Introduction to Cost Reports (Data and Data Manipulations)
Introduction to Cost Reports
(Data and Data Manipulations)
1
Agenda
• Introduction
• Introduction to the cost report
• Basic Flow of Reimbursement
• Reimbursement Mechanisms
• Cost Report Worksheets
• WS A Series, WS B Series, WS C, WS D Series, WS E Series, WS G Series, Specialty Pages
• Data Sources for the Cost Report
• General Ledger (TB)
• Payroll
• Volume Reports (CDM with Volumes), Revenue and Usage files
• Statistical Data (B-1 Statistics, Days/Discharges, Visits, etc.)
• PS&R
• Other General Data Elements (AP File, I&R FTE, Medicaid Eligibility, Bad Debts, Organs, Etc)
2
Agenda (cont.)
• Processing Data for Specific Cost Report Pages
• Financial Data
• Detailed Analytical Workpapers
• Statistical Data
• Payroll Data
• Settlement Data
• Specialty Pages
• Electronic Data Processing vs. Manual Processing
• Excel
• Access
• Data Import to Cost Report Systems
• Other Solutions
3
Introduction
• Medicare Cost Reports – Why are they important?
• Reimbursement
• CMS Analysis/Rate Setting
• Public Uses (FOI)
• Congressional Data for Policy Planning
• Medicare Healthcare Cost Report Information System (HCRIS)
• Medicare Provider Analysis and Review (MedPar)
• Accuracy, Efficiency, Consistency and Full Documentation
• Reconciliation is Critical, always be able to document how information was derived and where
every value came from.
• Electronic Data Manipulation vs. Manual Data Manipulation
• Electronic vs. Paper
4
Introduction to the Cost Report
• Part A vs. Part B – Defined
Physician Services
IP Ancillary
Services
Outpatient
Services
Onsite/Offsite
Clinics
Clinics and MD
Offices
Medicare Part A intermediary Medicare Part B Carrier
Medicare Cost Reports (UB-92 Bills) CMS-1500 Bills
Cost Report Part A (IP) Cost Report Part B (OP)
Medicare Program Part A Medicare Program Part B
IP Services
Hospital Based
Outpatient Services Clinic Services
5
Introduction to the Cost Report
• Reimbursement Mechanisms for Hospital Units/Entities
• IP Acute Care – DRG (Diagnostic Related Groups)
• A system to classify hospital cases into one of approximately 500+ payment categories expected to have similar hospital
resource use, developed for Medicare as part of the prospective payment system. DRGs are assigned by a "grouper"
program based on ICD diagnoses, procedures, age, sex, discharge status, and the presence of complications or
comorbidities.
• Hospital Based Outpatient Services – APC
• Payments made under the Outpatient Prospective Payment System (OPPS) are based on the ambulatory payment
classification system, which divides all outpatient services included in the payment schedule into groups.
• Hospital Based Clinics – APC or Cost Reimbursement (Based on Designation)
• Skilled Nursing Facility/Unit – RUGS (Resource Utilization Groups)
• SNFs are paid a comprehensive per diem under a PPS. This SNF PPS per diem represents Medicare’s payment for all
costs of furnishing covered Part A SNF services (routine, ancillary, and capital-related costs), excluding costs associated
with operating approved educational activities and costs of those services that are excluded from SNF Consolidated
Billing (CB) . The RUGS are measures of staffing intensity and are used to categorize residents for Medicare payment
under the skilled nursing facility prospective payment system.
• IP Rehab Services – IRFPPS (IP Rehabilitation Facility Prospective Payment System)
• The IRF PPS payment for each patient is based on information found in the IRF patient assessment instrument (PAI),
which contains patient clinical, demographic, and other information, and classifies the patient into distinct groups based
on clinical characteristics and expected resource needs.
6
Introduction to the Cost Report
• Reimbursement Mechanisms for Hospital Units/Entities (Cont.)
• IP Psychiatric Services – IPFPPS (IP Psychiatric Facility Prospective Payment System)
• Under the IPF PPS, Federal per diem rates include inpatient operating and capital-related costs (including
routine and ancillary services) and are determined based on geographic factors, patient and facility
characteristics.
• Home Health Agency – HHAPPS (Home Health Prospective Payment System)
• The unit of payment under the HH PPS is a 60-day episode of care. The HHA receives approximately half of
the estimated case-mix and wage-adjusted payment for the full 60 days when the Medicare Contractor receives
the Request for Anticipated Payment (RAP) and the residual half at the close of the 60-day episode unless
there is an applicable adjustment to that amount.
• Reimbursement Mechanisms for “Special Services”
• IME/GME (Medical Education) – Intern/Residents FTE and Per Resident Amounts
• Disproportionate Share Hospitals (DSH) – Indigence Percentage
• Medicare Bad Debs – Portion of the Un-paid Medicare Coinsurance and Deductibles
• Organ Acquisition – Cost Reimbursement
7
Cost Report Worksheets
WS A Series – General Ledger or Trial Balance information by functional department
WS B Series – Allocation of Overhead costs to Patient Treatment and Other Operating Departments
WS C Series – Revenue by patient treatment department to determine the cost/charge ratio
(for every dollar billed how much did it cost to provide the service to the patient)
WS D Series – Determine the Cost of Treating the Medicare/Medicaid Patients by Reimbursement
Mechanism
WS E Series – Determine the Due to/from Medicare Program based on the Reimbursement
Mechanism/Cost/Interim Payments
WS G Series – Financial Statements
WS S Series – Statistical information and Wage Index
WS L Series – Inpatient Capital Payments
WS H Series – Home Health Services
WS J, K, M Series – Clinics and Freestanding Components
WS I – End Stage Renal Dialysis (ESRD)
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Data Sources used in the Cost Report
General Ledger (T/B) – This is the MAIN source of data that is used in the cost report. It identifies all
the expense and income for the activities performed at the facility. The GL will be used in MOST
worksheets throughout the cost report. This data should ALWAYS be reconciled to the Financial
Statements. Remember that Medicare Auditors think differently than Financial Auditors.
Payroll Data – This data will be used for several purposes. The most important use is for the Wage
Index reporting, but it can also be used for FTEs and Hours (WS S-3 Part I and B-1), MDs (WS A-8-
2), Benefits Analysis (WS S-3 Part 4), etc. This file should be reconciled to the GL.
Volume Reports (CDM with Volumes) – These files are used for several purposes. The most important
use is for adjustments to WS C Charges, but it can also be used for Analytical workpapers related to
WS A-6 reclassifications, Adjustments for WS A-8, etc. This file should be reconciled to the GL.
Revenue and Usage files – These files are used to allocate the Medicare PSR revenues, supporting
data behind Title 19 and 5 data, etc. These files should be reconciled to the Volume Report.
Statistical Data – Statistics can be comprised of a variety of information from the WS B-1 Overhead
allocation Statistics (Sq Ft, Laundry, Meals, Time Studies, etc.) to specific statistics used in
analytical workpapers. These files should be reviewed for consistency and reasonableness.
PSR – This is the Payment Summary report from Medicare. This file will be used for the Settlement
process (WS D, E and L). There are some minor data items from the PSR that end up in other cost
report worksheets as well.
9
Processing Data for Specific Cost Report Pages
Financial Pages
WS A (Costs by Medicare Cost Center)
WS A-6 (Reclassifications)
WS A-8 (Adjustments)
WS A-8-1 (Related Party Transactions)
WS A-8-2 (MD Compensation)
WS C (Revenues)
WS S-3 Part 2 (Wage Index)
WS S-3 Part 4 (Benefits) – (old CMS 339 Exhibit 6)
WS G (Financial Statements)
Reconciliations!
10
Processing Data for Specific Cost Report Pages
Detailed Analytical Workpapers
WS A-6 Analysis
WS A-8 Analysis
WS C Revenue Adjustments
Analysis to confirm treatment of costs
Analysis to identify how to treat costs
Analysis in lieu of actual costs numbers
Combining multiple data sources into a workspace
Reconcile to original data sources
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WS A (Summary)
12
WS A (Summary - Adjustment)
13
WS A (Summary - Footnotes)
14
WS A (Detail)
15
WS A-6 (Simple Reclassification)
16
WS A-6 (Complex Reclassification Page 1)
17
WS A-6 (Complex Reclassification Page 2)
18
WS A-8 Adjustments
19
WS A-8-1 Related Party Transactions
20
WS A-8-1 Home Office As Filed Expense
FYE 06/30/2006 As- Filed Home Office Totals:
Home Office Cost Description
Direct
Allocation (Sch
E & E-1)
Functional
Allocation (Sch
F & F-1)
Pooled
Allocation
(Sch G)
Total Home
Office
Allocation
Home Office - New Capital 50,000 50,000
Total New Capital - Bldg & Fix 50,000 - - 50,000
Home Office - New Capital 100,000 100,000
Total New Capital - Movable Equipment 100,000 - - 100,000
Home Office - Other Capital - - -
Total Other Capital - - - -
Non-Capital Related Costs 1,500,000 16,000,000 17,500,000
Total Non-Capital Related Costs 1,500,000 - 16,000,000 17,500,000
Grand Total 1,650,000 - 16,000,000 17,650,000
Home Office Interest Income $0 $0
Grand Total (Net of Interest Income) 1,650,000 - 16,000,000 17,650,000
Check Total Schedule H HO Report 1,650,000 16,000,000 17,650,000
Difference - - -
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WS A-8-2 MD Compensations
22
WS C (Summary)
23
WS C (Summary - Footnotes)
24
WS C (Reclassification/Adjustment - Detail)
25
WS S-3 Part 2 (Wage Index)
26
WS S-3 Part 4 (Benefits)
27
WS G (Summary)
28
WS G (Detail)
29
GL/TB Recon to Financial Statements
30
CR Recon to Financial Statements
31
WS A-8 Recon
32
Sample A-8 Other Operating Revenue
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Processing Data for Specific Cost Report Pages
Statistical Data
WS B-1 Statistics (Sq Ft, Laundry, FTEs, Meals, Time Studies)
Reconcile or check for reasonableness
WS S-3 Part 1 (Patient Days/Discharges/Treatments/Visits)
Minor Statistics throughout the cost report
Document the source and how value was generated
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WS B-1 Statistics (Sq Ft)
35
WS B-1 Statistics (Meals)
36
WS S-3 Part 1 (Days/Discharges)
37
Processing Data for Specific Cost Report Pages
Payroll Data
WS S-3 Part 2 (Wage Index)
Pay Code vs. Job Description Usage
WS S-3 Part 4 (Benefits)
WS B-1 Statistics
FTEs
Nursing FTEs
38
WS S-3 Part 2 (Wage Index)
39
CMS 339 Exhibit 6 Support Workpaper
40
WS S-3 Part 4 (Benefits)
41
WS B-1 Statistics (FTEs and Nursing FTEs)
42
Processing Data for Specific Cost Report Pages
Settlement Data
Report Types to include (Do not include MSP and Fee Reimbursed)
Columns to include (4 columns of potential data – time)
Program Charges (Revenue Codes 100-999)
WS D-4 IP Program Charges
WS D Part 5 OP Program Charges
Program Payment Information
WS E Series (PPS Amount, Deductible, Co-Insurance, Payments, etc.)
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Most Common PS&R Report Types
Most Common PSR Report Types
Report Type Description IP/OP Cost Report Applicable Charge Grouping
110 I/P Part A IP Y D-4
118 Inpatient - Part A Managed Care IP Y
119 I/P PPS Interim Bills IP Y D-4
11R I/P Rehab IP Y D-4
11U I/P Psych IP Y D-4
120 Inpatient - Part B OP Y D, Part V
122 I/P Part B Vac OP Y D, Part VI
12P I/P Part B - OPPS OP Y D, Part V
12Z Ambulance Blend OP Y D, Part V
130 O/P All Other / Ambulance OP Y D, Part V
132 O/P Part B Vaccines OP Y D, Part VI
13P O/P OPPS OP Y D, Part V
13Z Ambulance Blend OP Y D, Part V
140 O/P All Other OP Y D, Part V
142 O/P Clinical Lab Non Patient Vac OP Y D, Part VI
14P O/P Other OPPS OP Y D, Part V
210 SNF I/P Part A IP Y D, Part V
220 SNF I/P Part B 100% OP Y D, Part V
222 SNF I/P Part B Vac OP Y D, Part VI
230 SNF O/P OP Y D, Part V
232 SNF O/P Vac OP Y D, Part VI
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WS D-4 Program charges (by RecCode)
45
WS D-4 Program Charges (by CC#)
46
WS D Part 5 Program Charges (by RevCode)
47
WS D Part 5 Program Charges (by CC#)
48
WS E Series - Program Payment Information
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Processing Data for Specific Cost Report Pages
Specialty Pages
WS H Series (Home Health)
WS I Series (Renal Dialysis)
WS J Series (CMHC, OP Rehab)
WS K Series (Hospice)
WS M Series (RHC/FQHC)
WS D-6 (Organ Acquisition)
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Electronic Data Processing vs. Manual Processing
Voluminous data: processed and re-processed many times to achieve analyses
Critical: Accuracy and Efficiency
Manual processing: system and data/analysis changes yearly (e.g. new system), Non Standard
Processing, one time adjustments
Electronic processing: data/analysis consistent or with minimal changes yearly (e.g. new cost centers, new
accounts)
Ways for electronic processing:
• Excel
• Access
• KPMG GL Download Import
• HFS AAI Import
• Other products that can help
Monarch
• Easy WP
• Decision Support Systems
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Jeff Wolf, Partner
Essential Consulting LLC
1104 West Laredo Ave
Gilbert, AZ 85233
(480) 759-1950
Jaycee Lin, Partner
Essential Consulting LLC
2720 Joaquin Drive
Burbank, CA 91504
(818) 434-1533
Andrew Kinnaman, Partner
Essential Consulting LLC
7 Surrey Street
San Francisco, CA 94131
(415) 307-5007
Questions and Answers
